The dark side of the construction sector
A recent survey by KPMG questions whether adequate prosecution powers given to probing agencies such as CVC can control corruption effectively
Anti-corruption movements have gained momentum in different parts of the world; so also reportage of financial bundling and irregularities involving several corporate titans. It is not only political corruption but also corruption in the corporate sector that has been the subject of many a debate and discussion, and research studies.
Recently, KPMG had initiated a study with corporates across industry verticals to assess their perspectives and viewpoints on corruption and its impact on the Indian economy. The survey analysed the prevalence of corruption in various sectors including the real estate and the construction sector. The unfolding of the 2G scam and extensive coverage by the media has given the telecommunications sector the reputation of being most corrupt; but equally mired in deep rooted corruption is the construction sector. Widespread builder-official nexus and multi-million scandals in this sector should raise serious concerns.
With globalisation and growing business opportunities the real estate sector witnessed a boom. But the disproportionate growth of the industry coupled with a parallel multi-layered complex system has resulted in unhealthy competition where recourse to unfair means and unethical practices to gain contracts has taken centrestage. As projects grow large and complex, there is a parallel rise in associated contracts such as environmental clearances, multiple vendor agreements, regulatory compliance requirements and so on. This often results in companies unintentionally overlooking some aspects of compliance – both at the regulatory and contractual levels – therefore creating opportunities for bribery.
The government, several non-profit and civil society organisations have initiated various strategies and programmes to tackle this – example being the national e-governance plan for procurementthat requires contractors to sign up integrity pacts for public infrastructure projects. The Government of India also plans to introduce private-public partnership in the infrastructure space under the review of the Comptroller and Auditor General (CAG) to ensure greater transparency and integrity. There is no denying that new anti-corruption mechanisms and legislations need to be enforced. However, it is vital to understand the reasons behind the poor enforcement and dropping success of already existing policies.
On close examination, the first thing that stands out is lack of a law or policy that protects the whistleblowers. Though we do have the proposed legislation in the form of The Public Interest Disclosure (Protection of Informers) Bill, 2009, very little is done to protect individuals exposing cases of bribery or corrupt officials. The murder of Sathyendra Dubey is a standing testimony to this. The slain engineer of the National Highways Authority of India who exposed the high levels of dishonesty and mishandling of funds in the Golden Quadrilateral Project was shot dead in 2003. Further, lack of adequate autonomy and prosecution powers for nodal agencies like CVC are major roadblocks in majority of the corruption trials. As most of the interfaces in these cases are between government officials and private contractors, prior sanctions from the central and state governments slowdowns the momentum and hinders the effective initiation of any action against erring officials.
A sustained enforcement policy towards eliminating corruption and instances of bribery should therefore be the government’s priority. Constant reporting and exposing irregularities in the government, administrative and the corporate sphere is necessary, but sufficient measures also need to be taken on a regular basis to tackle corruption. Empowering various investigating organisations like the State Lokayuktas and giving them the discretion to act in Suo Moto would act as a catalyst in punishing the offenders.
It’s time the government designed and implemented an all-inclusive anti-corruption policy that not only holds bribe takers and bribe givers accountable but also encourages whistle-blowers to come forward and report cases by making provisions for their protection. No transparency and accountability can be enforced in any system if the required checks and balances are not in place.